Negotiate with Koreans

Negotiate with Koreans

Not long after, Chamberlain heard that General Motors was purchasing lithium-ion batteries from South Korea’s LG Chem for the latest Volt plug-in hybrid. The car is a product of the U.S. auto giant’s bid to seize leadership in electric vehicles. Chamberlain also heard that LG’s batteries use Argonne’s NMC. Not ready to be “Silence of the Lambs”, he flew to Seoul.

Chamberlain has no plans to sue LG—he doubts the U.S. government will allow the two companies to fight a protracted patent battle, at least not for now. One reason is that some people think that South Korea is not a direct competitor in the battery race. These people believe that the greatest hope of the United States may lie in an alliance. If this is the case, then choosing an alliance will be easy: China has its own geostrategic and development goals, and it is not realistic to form an alliance with China; Japan has always developed independently and does not like to share scientific research results. The rest of South Korea has long since realized the benefits of cooperating with the United States. In 2010, the U.S. government awarded $160 million of the $2.4 billion incentive fund to LG. The fund is designed to help the U.S. vie for its position as the global leader in advanced batteries. LG, one of the core companies receiving funding from the fund, will build a federally-backed battery factory in the U.S., adding hope to the U.S. battery industry to win the race.

Republican critics attacked the fund. Their complaint was not what you might expect—the second-largest sum of the incentive fund went to a Korean company. In effect, they complained, Obama was “picking winners.” He designated batteries and electric vehicles as the backbone of the next great economic boom, but could not give credible evidence.

They’re right about one thing – no one can be sure that industry expectations will become reality. But the truth is the opposite of this skepticism: the battery race itself is on, there’s no doubt about it. In addition, battery makers continue to improve lithium-ion, automakers are designing and launching new electric vehicles, and governments are funding and subsidizing R&D teams.

Agung is also very kind to Koreans. Every time South Korean scientists and companies visit the lab, they cooperate so well that, years later, they are treated as “honorary citizens of the United States.” Still, Chamberlain believes that as the U.S. grapples with its place in the battery age, it needs to be clear about what is its own. Because of this, even though South Korea is a commercial ally of the United States in the battery space, Chamberlain still targets them. He wants Argonne to get what he deserves.

To that end, he personally went to Seoul to inform LG that the company was about to infringe Argonne’s patents. The Koreans received funding from the U.S. government’s incentive fund, and they also accepted some bylaws, promising to honor U.S. patents. While LG is not necessarily bound by Argonne’s patent outside the United States, it is in fact leading GM to infringe. Since the US company is bound by the patent, that would be a breach of contract. Chamberlain used this shrewd legal maneuver to convince Koreans that LG had to license the patent, and LG did.

Next up is General Motors. LG already purchased NMC’s patent licenses from Argonne, so in theory GM wouldn’t have to buy another license. However, the automaker is intrigued by the high-performance version 2.0 of the NMC introduced by Chamberlain. It is particularly obsessed with a small start-up near San Francisco called Envia Systems. The company, which has a partnership with Argonne, has licensed a patent from NMC and is poised to open up new areas of development for the patent. Envia improved the performance of the cathode developed by Thackeray and Johnson, suggesting that NMC version 2.0 may soon be out of the lab and into commercial use. General Motors hopes to be “the first to eat crabs”. With this new technology, General Motors is expected to cut the cost of the Volt hybrid and boost Volt sales. Additionally, it could potentially power future pure electric vehicles without a backup gasoline engine. So, General Motors also bought NMC’s patent license. The purchase agreement comes with a clause that basically says: If Argonne succeeds in creating an upgraded version of the NMC, General Motors can use it in future electric vehicles, and Argonne will receive a handsome bonus.

Chamberlain, Thackeray, Johnson and Oman were overjoyed. The Asian giant finally said goodbye to the history of no patents. Now a company is liable if it wants to use Argonne’s patents for free. It has to “pay the bill” for intellectual property. Argonne’s precedent has drawn the attention of U.S. nonprofit labs, which have been plagued by such violations, particularly those at universities. When Chamberlain was at a meeting, an MIT intellectual-property lawyer pulled him aside and said, “We hope we can broker a deal like yours,” Argonne’s contract with LG. “We work with start-ups. And you license both start-ups and large companies. If it’s a large company, you can be sure that the material will go into production.”

Today, Argonne is getting the attention of industry giants. It licenses not just startups born in garages that may fail next year, but global giants like General Motors. The latter would actually put the licensed technology into a product.

Chamberlain wandered around the battery department, holding a mini post-it note with some numbers on it. He walked up to Chris Johnson and said, “You’ll get so much more next paycheck.” Johnson was wearing protective glasses and working at his bench, looking at Chamberlain suspiciously.

“That’s revenue from patent licensing,” Chamberlain explained.

Chamberlain distributed about $1.8 million in prize money to the scientists. He then informed Thackeray, Oman and others. The response was overwhelming wherever it went. Chamberlain is very happy, and scientists respect him beyond words.

One day Thackeray said to him, “You’re a battery insider now.”

In the summer of 2010, Argonne management gave Chamberlain more responsibilities. In addition to his original IP patent licensing responsibilities, Chamberlain served as director of the battery division. Thackeray thinks the lab has gotten better from a leadership standpoint, certainly not to offend Chamberlain’s predecessor. He called Chamberlain a “deserved superstar.” That’s what he wanted to praise Chamberlain for when his patent was eventually applied to electric vehicles. You know, that was the result of his life’s research, so that patent deal was significant. However, he hopes that Chamberlain will also focus on the commercial character of Argonne National Laboratory as a whole. In general, government workers are weaker at enforcing patents—after all, federal laboratories are not commercial enterprises. But Chamberlain is an exception. One day, Oman left the lab with his $63,000 BMW, which he explained: “The car was bought with the proceeds of a patent license.” He credits Chamberlain for this achievement. After a series of patent licensing deals, Xiaoping has new hope. Every time Oman came home from get off work, she would always ask, “Have you sold patent licenses recently?”

For scientists, respect from their peers is a big motivator, but Thackeray and Oman argue that commercialization can bring the same recognition, perhaps more so. They are forever grateful to Chamberlain.

Thackeray sees this achievement primarily from a personal perspective. He felt that these patent licenses showed that “the dominoes of this technology are collapsing.” Technology is moving from the lab to the factory. Today, the 62-year-old Thackeray is exploring the NMC 2.0 version, drawing a successful conclusion to his career. “I’m going to keep fighting,” he said. “I feel like I’m surfing in a sea in South Africa. I’m waiting for the waves to hit the beach.” However, so far this has not happened. Thackeray is content with his profession. Chamberlain convinced him that as long as NMC 2.0 was born, he could retire with honor. Thackeray said, “The situation is very good now, and there is a lot of talent.”

The future of NMC 2.0 looks bright—the U.S. has the upper hand in the battery “war”—but, Chamberlain knows, it’s still far from satisfactory. Electric vehicles are still a pending proposition. Car buyers are clear about electric vehicles when they visit showrooms, but may be hesitant if government subsidies are very strong. Even then, electric vehicles may still be a “social good” — a product aimed at a niche market of consumers who want to connect with green activism. Battery insiders still have a long way to go.